IBM Cloud: No shift, Sherlock

OpenShift is a key ingredient in the latest shift in IBM’s long-running cloud strategy. We look at what it means

IBM’s cloud strategy has gone through a number of iterations as it attempts to offer a compelling hybrid cloud to shift its customers from traditional IT architectures to modern cloud computing.

IBM is gambling that those customers who have yet to embrace the public cloud fully will remain committed to private and hybrid cloud-based infrastructure, and, if they do use public clouds that they will want a cloud-agnostic approach to move workloads.

In July, IBM closed the $34bn purchase of Red Hat, an acquisition it hopes will finally enable it to deliver cloud-agnostic products and services.

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To tie in with the completion of the acquisition of Red Hat, IBM commissioned Forrester to look at the benefits to organisations that are both Red Hat and IBM customers.

The analyst firm reported that those organisations using both IBM and Red Hat products could improve resource utilisation and reduce infrastructure and licensing costs, which reduces the total cost of ownership (TCO) for IT departments. It also identified opportunities for IBM and Red Hat’s joint customers to use the tools from the two companies to modernise ageing IT infrastructure.

Red Hat represents IBM’s most audacious attempt at establishing its cloud as the preferred choice for enterprises. Red Hat was the company that made a name for itself, hoovering up the IBM Aix, Sun Solaris and HP-UX proprietary Unix business in the datacentre with its enterprise Linux distribution. This remains a strong business, but Red Hat is now focusing on containerisation.

In March 2019, Red Hat posted annual revenues of $3.4bn, up 15% year-over-year, with $2.9bn of the total coming from its subscription business. The company declared earnings of $2.1bn on infrastructure products. These include the flagship Red Hat Enterprise Linux (RHEL) operating system and OpenShift, the company’s hybrid cloud product.

Arvind Krishna, senior vice-president for cloud and cognitive software at IBM, said: “We are providing the essential tools enterprises need to make their multi-year journey to cloud on common, open standards that can reach across clouds, applications and suppliers with Red Hat.”

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IBM’s goal is to provide a common platform based on Red Hat’s Linux distribution and OpenShift to deploy cloud-agnostic containerised software.

In a presentation to investors on 6 August 2019, IBM outlined its strategy for Red Hat. It discussed the concept of CloudPaks – essentially IBM software pre-integrated and containerised using Red Hat OpenShift.

The goal is to drive the adoption of a new IBM blueprint for cloud computing, based on containerising applications using OpenShift. Potentially, this gives IBM’s existing customers the freedom to decide how they wish to deploy – on a public cloud such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud or the IBM Cloud; in a private cloud; or on-premise. But history shows that IBM’s track record in cloud computing has been constantly shifting.

A decade ago

In 2009, IBM Blue Cloud represented the company’s foray into cloud computing with an on-demand service. It later introduced a portfolio of cloud offerings and tools under the SmartCloud umbrella.

In 2013, IBM began discussing a hybrid cloud strategy, and introduced a private cloud offering based on OpenStack software that it claimed would “significantly speed up and simplify managing an enterprise-grade cloud”. At the time, it wanted to offer businesses a core set of open source-based technologies to build enterprise-class cloud services that could be ported across hybrid cloud environments.

Later that year, IBM purchased SoftLayer Technologies for $2bn, and said the acquisition would strengthen its leadership position in cloud computing. It said SoftLayer would accelerate its ability to integrate public and private clouds for its clients, with flexibility that provides deployment options that enable a faster, broader transformation for small, medium and large businesses with a range of performance and security models.

IBM said the acquisition of SoftLayer would complement its existing SmartCloud portfolio, providing enterprises with easy access to a broader range of choices that transform their workloads “while continuing to innovate with SoftLayer to meet the needs of born-on-the-cloud firms”.

In 2013, IBM also began collaborating with Pivotal on the further development of Cloud Foundry. IBM said it would incorporate the Cloud Foundry platform into its own open cloud architecture. Three years later, in 2016, Softlayer became Bluemix, which changed its name again in 2017 to IBM Cloud.

IBM Cloud is different

While IBM has a large number of enterprise customers which are beginning to migrate critical workloads to the public cloud, in its latest Magic Quadrant market analysis, Gartner warned that despite having many worldwide datacentres, the IBM Cloud experience remains disjointed.

“Many features are available only in specific locations. This and an unexceptional user experience cause IBM to have a higher level of user dissatisfaction,” Gartner stated. The analyst firm marked IBM down, both in terms of its ability to execute and the completeness of its vision. From Gartner’s perspective, IBM is regarded as a niche player in the cloud infrastructure market.

That said, Gartner sees IBM’s overall strategy as providing capabilities and tooling for enterprises, allowing them to choose the cloud environment that is best for their specific application requirements. IBM sees this as a $350bn market opportunity, to capture strategic workloads that can run on its OpenShift-based hybrid cloud infrastructure.

Clearly there will be a large number of IT buyers who will be happy to purchase additional products and services from IBM, which will now include Red Hat’s portfolio.

But what remains to be seen is what happens to Red Hat customers who do not already have a relationship with IBM. Commenting on IBM’s acquisition, Tomas O’Leary, CEO and co-founder of third-party IBM support firm Origina, said: “We are seeing a massive increase in calls ranging from SMEs to big corporates who use Red Hat.”

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